Sydney, Seoul and Shanghai extend record runs

V.Phani Kumar

HONG KONG (MarketWatch) -- Asian indexes advanced Wednesday after a record finish on Wall Street overnight, with stocks in Sydney, Seoul and Shanghai finishing at record highs of their own while Japanese indexes gained on exporters such as Honda Motor Co. and Nintendo Co.

In late afternoon trading, indexes in Mumbai and Jakarta were on the way to setting fresh closing records.

In Hong Kong, the Hang Seng Index ended up 1.2% at 28,569.33, led by China-related issues such as China Mobile and Industrial & Commercial Bank of China, aided by a string of record finishes in Shanghai recently.

The index opened strongly, rising as high as 28,771.47 in the morning session, but turned volatile in the afternoon although the special administrative region's chief executive, Donald Tsang, announced tax cuts in a policy address Wednesday.

"The Hong Kong market doesn't look at Hong Kong news anymore, it looks more closely at news from mainland China. Local economic news isn't something to get excited about for investors," said Francis Lun, general manager at Fulbright Securities in Hong Kong. "Previously, the market used to closely watch the policy speech, but not now."

In Tokyo, the Nikkei 225 average rose 0.2% to 17,194.41, but the broader Topix index came off its earlier highs and was little changed at 1,659.96. Among Asian benchmark indexes, Japan's Nikkei is currently the only one that is trading lower than its closing level for 2006.

More records

Continuing its record run, Australia's S&P/ASX 200 rose 0.9% to 6,738.30, registering gains for the fourth straight day. In South Korea, the Kospi added 1.3% to 2,041.12, advancing for the third successive session.

China's Shanghai Composite climbed 1% to 5,771.46, marking its 71st record close so far this year and its fifth higher close in a row, on continued buying by retail investors looking for returns better than those from interest rates on bank deposits.

In late afternoon trading, India's Mumbai rose 1.7% to 18,592.33 and Indonesia's Jakarta Composite climbed 1.6% to 2,588.01. Both indexes ended at record highs Tuesday and hit intraday highs earlier in the session. Singapore's Straits Times index declined 0.5% to 3,847.33, after rising as high as 3,906.16 earlier in the session.

In a note to clients, Morgan Stanley wrote that its Morgan Stanley Capital International Asia-Pacific (excluding Japan) equities index "is in the midst of its most powerful rally in 20 years".

"Certainly, the pace must slow," the report added, citing high valuations and "catalysts for a pullback" such as a potential U.S. growth snapback, overheating of the Chinese economy, or a reversal in equity inflows.

"However, we believe Asia's re-rating to a premium to world markets is deserved, and that positive liquidity conditions, solid earnings growth, and strong inflows should drive the market higher, if at a slower pace, over the next 6-12 months," it added.

Regional Detail

Sony Corp. (6758)
SNE, -2.20%
stock wavered after the company's games unit said Tuesday it would reduce the prices of its next-generation PlayStation 3 game consoles in Japan and offer a new low-range model beginning in November. The shares finally ended 0.7% lower. See full story

Shares of Mazda Motor Corp. (7261)
MZDAF, +0.51%
added 0.5% after Nikkei business news reported that it plans to set up a small-car plant in Thailand with top shareholder Ford Motor Co.
F, -0.35%
The new factory is slated to enter operation in 2009 and produce 100,000 vehicles annually, the report said.

Shares of MTR Corp. (66)
MTRJY
gave up 1.8%, unable to sustain early gains, although its shareholders approved the Hong Kong railway operator's long-awaited merger with Kowloon-Canton Railway Corp late Tuesday.

In currency trading, the U.S. dollar rose 0.1% to 117.27 yen while the Australian dollar fell 0.1% to $0.8986.

Crude oil for November delivery fell four cents to $80.22 a barrel in electronic trading, after closing up $1.24 at $80.26 on the New York Mercantile Exchange Tuesday, on concerns about U.S. heating-oil supplies ahead of seasonal demand.

The U.S. markets rallied on Tuesday afternoon after the Fed released minutes of the Sept. 18 meeting of the FOMC, when policy makers lowered a key interest rate to 4.75%. The Dow Jones Industrial Average
DJIA, +0.35%
gained 120.8 points to a record close of 14,164.5. The S&P 500 Index
SPX, +0.01%
rose 12.57 points to also close at a record-high 1,565.15, while the Nasdaq Composite
$COMPX
ended 16.54 points higher at 2,803.91.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.